Group Claims Eliminating Sales Tax Would Create Thousands of Jobs

A conservative think tank is recommending that Rhode Island phase out the state sales tax.

According to a report issued by the Rhode Island Center for Freedom and Prosperity, doing so what would create over 21,000 jobs and make the Ocean State a hotbed for economic development.

In addition to creating jobs, the “Zero.Zero” report suggests that reductions in tax rates would pour hundreds of millions of dollars back into the economy, raise revenues for cities and towns and increase population in the state.

The report also suggests certain tax and fee increases in the proposed House budget will only “extend the state's downward economic spiral” and increase what is already the second-highest unemployment rate in the country.

"Does anyone in the political class recognize that our state economy is failing? That our citizens are suffering? To suggest any increase in taxes guarantees that we will continue to limp along the same path that led us into this rut in the first place," said Mike Stenhouse, CEO for Center for Freedom and Prosperity. "It is alarming that the lack of jobs, the loss of population, and our state's dismal economic growth has merited virtually zero response from our public officials. Why are we not having a special session of the General Assembly this fall to deal with jobs?”

Only Alaska, Delaware, New Hampshire, Montana and Oregon currently do not have a general sales tax, although the exact stipulations vary by state. The plan would phase out the sales tax over a four-year period, which the organization says would increase the state’s GDP by “billions of dollars.”

Stenhouse criticized state leadership for not taking a more proactive approach when it comes to economic development in the state.

“The title of our report –“Zero.Zero” – reflects both the rate we suggest for the sales tax and, regrettably, the level of leadership state officials have shown. Instead of considering ways to reverse course and grow our economy, legislators are obsessed with perpetuating a failed budget,” he said. “We shouldn't just hope for change; we must enact proactive reforms to restore competitiveness to the Ocean State.”

In a release sent by the organization, Stenhouse criticized the $75 million loan guarantee that state granted to Curt Schilling’s 38 Studios and suggested his plan would create thousands of jobs as opposed to the 450 Schilling said he would create.

“Cronyism must be replaced with policies that will attract a broad range of businesses. Only dramatic reform can produce dramatic improvement," he said

Stenhouse said he hopes the report will spur debate in Rhode Island about public policy alternatives that should be considered to restore prosperity.

"For too long, policymakers have considered only two options: raising taxes or doing nothing,” he said. “Both of these have clearly failed our citizens. A third option - reducing the tax burden on Rhode Island residents and businesses - must now be considered. Rigorous debate about eliminating the sales tax must take place in Rhode Island before the next legislative session.”